MIFC is Best

The Malaysia International Islamic Financial Centre (MIFC) has been named the "Best International Islamic Finance Centre" at the 2nd Annual London Sukuk Summit Awards of Excellence.

Source: Business Times

9MP - Takaful & Retakaful

The government targets GPD growth at 6% p.a. for 2008-2010. Growth in the financial and business services subsector is expected to be at 9.8% p.a. with islamic banking, takaful and re-takaful, shared services and outsourcing as the main contributors.

Source: The Edge Daily

Capital Injection into Indonesia

Takaful Malaysia has obtained BNM's approval to inject a capital of up to RM25 mil into PT Syarikat Takaful Indonesia ("STI"), which is 56% owned by Takaful Malaysia. The purpose is to strengthen the capital structure of PT Asuransi Takaful Keluarga (99.9% owned by STI) to meet the minimum solvency requirement under the risk based capital framework.

Source: Bursa Malaysia

Decision in August

OCBC Bank will decide in August whether to merge Pacific Insurance (Pacific) with Overseas Assurance Corporation (OAC) or to sell off Pacific. The decision is needed to be in compliance with MoF's requirements of not owning more than 1 insurance licence.

OCBC owns 61.7% of PacificMas since April this year.

Source: The Edge Daily

Risk Management Depository

We are starting a new topic on Risk Management. The objective is to create a central depository for risk management lessons learned in the insurance industry worldwide.

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An audit firm has been fined for failures in its duties as auditor of Independent Insurance. Independent Insurance collapsed in 2001. The actuarial consulting firm alerted that the reinsurance contracts taken out by Independent did not stack up but the auditor failed to check the terms of the reinsurance treaties.

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MAA Expects to be Back in the Black

MAA expects to write back RM49 mil and recover 40% of its NPLs by end of the year. Todate the group has recovered 15% of its NPLs.

The writeback of RM49 mil is thru handing over an interest rate swap transaction to a bank. FRS 139 accounting standards have negative impact on such swap arrangement.

MAA plans to launch 6 more products this year.

MAA is still in discussion with AmAssurance on strategic partnership for its general insurance and takaful business.

Source: Business Times

One Less Suitor, One More Suitor

One Less Suitor

Allianz Insurance Management Asia Pacific Pte. Ltd has pulled out from the negotiations to acquire equity interest in MAA. It is believed that AmAssurance is left in the discussions at the moment.

MAA shares closed 10 sen or 8.5% down before the announcement.

One More Suitor

Fairfax Asia Limited has expressed interest to acquire an equity stake in Tahan. Currently there are 3 interested parties (including Fairfax) in negotiations to acquire Tahan.

Fairfax is a Canadian company and owns 1 of the largest general insurance companies in India.

Source: Bursa Malaysia 1 & 2

Maybank to Enter Pakistan Takaful Market

Maybank has received BNM's approval to acquire 30% of the Pak-Kuwait Family Takaful Co Ltd. Pak-Kuwait Family Takaful Co Ltd was in the process of applying for a license to conduct family takaful business in Pakistan.

Source: The Star

News in Brief

Etiqa Takaful has 10,000 agents and wants to focus on agency training. The hiking fuel prices and inflationary fears are expected to result in people less likely to consider an insurance policy.

Source: The Star

Takaful Ikhlas collected RM12.4 mil from Pahang in 2007 and is aiming for RM32.7 mil this year.

Source: The Star

Takaful Medic-Save Rider

Etiqa Takaful recently launched Etiqa Takaful Medic-Save Rider. This is a medical rider that can be attached to basic family takaful plans and it comes with a medical card for hassle-free admission.

Etiqa Takaful targets 20,000 policies and has achived 5,000 policies since the product soft launch in Feb 2008.

Some product features:

• H&S benefits
• Emergency & outpatient benefits
• Guaranteed renewal up to 75 years old

Source: Bernama

More Potentials for Retakaful Business

Munich Re Retakaful thinks that there is still untapped potential in the retakaful market in Malaysia. Although currently working with all 8 takaful operators in the country, Munich Re observes that when it comes to reinsuring the risks, the takaful operators do not just cede to retakaful operators but also to conventional reinsurers.

Munich Re also thinks that governments in Asia do not have enough insurance on public assets and utilities, compared to developed countries. The countries would lose in terms of GDP when a major disaster strikes and would have to resort to raising taxes to rebuild the infrastructure.

Source: The Edge Daily

Kurnia's New CEO

Captain K.H. Chia is now the new CEO of Kurnia Insurance. Capt. Chia is well known in the insurance industry, he served as Hong Leong Assurance's CEO before moving to Prudential in China. Captain is also 1 of the past presidents of LIAM.

Source: Business Times

Kurnia to Acquire KIT

Kurnia Asia Bhd ("KAB") is to acquire 18.9% of Kurnia Insurance (Thailand) Company Limited ("KIT") for a total cash consideration of Baht 75.6 mil. In addition, KAB will subscribe for 8 mil KIT new shares for Baht 80 mil, bringing its total holdings to 26.27% of the enlarged share capital.

KIT is involved in underwriting of non-life insurance in Thailand. It has 4 branches, 1 service centre, over 300 panel garages and more than 200 employees. Motor segment is a large proportion of KIT's business.

Source: Bursa Malaysia

No Privatisation

Takaful Malaydia issued 2nd announcement to Bursa Malaysia today (the 3rd announcement in the past 2 days!) and finally clarified that "the Company is not aware of any plan to take the Company private".

The company's share price closed 11 sen down.

Meanwhile, BIMB Holdings Bhd announced that it had obtained approval from BNM to commence negotiations with Abu Dhabi-Kuwait-Malaysia Strategic Investment Corporation on the latter's proposed acquisition of a strategic stake not exceeding 49% in Takaful Malaysia.

Source: Bursa Malaysia 1 & 2

Privatisation is an Option?

Takaful Malaysia has provided more information on the speculation on the privatisation of the company.

Bursa Malaysia posed 2 direct questions to Takaful Malaysia for the latter to confirm or deny:

• BIMB's plan to take Takaful Malaysia private
• Privatisation at between 2 to 2.5 times adjusted book value

Takaful Malaysia's clarified that "the Company has not concluded any discussion that may carry an intention to take the Company private. Discussions on a proposed strategic alliance with relevant parties are still on going and any decision on the matter will be announced in due course.".

The clarification does not seem to confirm nor deny the privatisation plan. I guess we may interpret that privatisation is 1 of the options under discussion and it is too early for details to be disclosed.

Source: Bursa Malaysia

HSBC Amanah Takaful Appoints New CEO

Mohammed Muqeem is the new CEO of HSBC Amanah Takaful effective 2/6/2008. He joined HSBC group in 2004.

Muqeem started his career in the insurance industry in 1969 in India. He has worked in the Middle East in both Saudi Arabia and Dubai.

Source: The Edge Daily

Is Takaful Malaysia to be Privatised?

Syarikat Takaful Malaysia Bhd (STMB) apparently does not want to answer the question directly.

Yesterday an article appeared in The Edge Daily titled "Takaful Malaysia to be Privatised". Today STMB makes an announcement to Bursa Malaysia saying that it "is still discussing with both Abu Dhabi-Kuwait-Malaysia Strategic Investment Corporation (ADKMSIC) and Islamic Arab Insurance Co. P.J.S.C. (SALAMA)" and "no conclusive arrangements have been achieved thus far". The announcement however does not say whether the company is to be privatised or not.

The speculation is the company would be privatised at between 2 to 2.5 times adjusted book value. The net book value as at 31/3/2008 was RM1.95 and today STMB's shares closed at RM1.87, down 12 sen. If the speculation proves to be correct, investors stand to make >100% capital gain!

STMB's Price Chart

Source: The Edge Daily, Bursa Malaysia

Inflation Impact

What impact would inflation have on insurance industry? LIAM, ACE Synergy and Manulife provided their opinions on this.

The general consensus seems to be the impact would not be significant in most aspects.

Read the article yourself to find out more.

Source: The Star

Sibu Branch for Great Eastern

Great Eastern recently opened its 3rd branch in Sarawak - the Sibu branch. The 4-storey building costs RM2.3 mil.

Sibu generated RM11.3 mil new business premium for Great Eastern in 2007, a hefty growth of 48.3% over 2006.

Source: The Star

LIAM Clarified on EPF CI Scheme

Life Insurance Association of Malaysia (LIAM) clarified that it was still in talks with EPF and various parties including MTUC on the proposed EPF CI scheme.

LIAM added that the insurance plan would take into consideration the affordability level of the masses and would aim to provide maximum benefits and coverage to the public.

The scheme would also be offered to any EPF member and their depandants on an optional or voluntary basis.

Source: Business Times

EPF: "Highly Erroneous Statements Were Made"

EPF has clarified that the critical illness scheme has not been launched yet. The scheme has yet to be approved by the finance ministry and EPF is still in discussion with MTUC.

On 11 June, it was reported in NST that MTUC was shocked that EPF had ignored its objections against a critical illness insurance scheme

EPF also said that the statements made by MTUC and Rexit were "highly erroneous". Rexit earlier predicted EPF CI premium to be at least RM3 bil and the minimum cost for the scheme was RM300 per year (see our earlier post below).

Meanwhile, Malaysia Today has an article commenting on EPF CI scheme with its information based on the "highly erroneous" statement. Obviously the figure of RM3 bil doesn't go well with the public at this sensitive time with the current political and high inflationary environment.

We have earlier questioned the assumptions behind the figure of RM3 bil. The best to do now is for the public to wait for EPF's official statement on the scheme before jumping the gun and making all sort of accusations based on "erroneous" statements.

Source: NST, Bernama, Malaysia Today

TM Asia's Goals and Statistics

TM Asia Life Malaysia Bhd has set the following goals:

• New business premium in 2008: RM190 mil, 76% growth
• Gross premium in 2008: RM553 mil, 26% growth
• To be top 5 life insurer by 2011
• Increase its market share to 5% in 4 years from 3% currently
• Increase agency force to 3,500 from 2,674 by year-end 2008
• To increase full-time agents from 30% to 45%
• Develop bancassurance channel
• Grow group insurance business by targeting Japanese companies in Malaysia
• Launch 4 products, mainly group retirement products
• Increase no. of policyholders to 280,000 from 220,000 by end of 2008

Some other statistics:

• Sold 7,000 policies for its 3 new products: Asia Precious Child, Asia Supreme Protector and Asia Cancer Shield since last year
• 16 branches in Malaysia
• 100 agency offices
• Total assests: RM3.4 bil
• Life insurance fund: RM3.1 bil

Source: Business Times & The Star

Rexit Made EPF CI Premium Prediction

Rexit, the appointed software company to developed e-Critical Illness System, has predicted outflow of at least RM3 bil from EPF following the launch of EPF Critical Illness scheme.

It was also reported that the minimum cost of the scheme was RM300 per year (please see comments below).

The basis of Rexit's prediction is not made known.

Source: Business Times

Tokio Marine to Acquire PanGlobal

PanGlobal has applied to BNM for approval to sell its general insurance business to Tokio Marine Insurance Malaysia for RM15 mil.

Source: Business Times

One Less Suitor for Tahan

Shriram Capital Ltd has pulled out from the negotiation to acquire Tahan. Meanwhile Tokio Marine continues to be in negotiation with Idaman Unggul on the acquisition of Tahan.

Source: Bursa Malaysia

New CEOs

Allianz Life: Alexander Ankel
Allianz General: Ng Hang Ming

Source: The Star

Motor Takaful through Tune Money

CIMB Aviva now sells its motor takaful through Tune Money, in addition to PA, motorcyclist PA and home protection plans.

There are 3 motor takaful plans available: comprehensive, 3rd party with fire and theft and 3rd party only.

For those with car registration card (i.e. not with the bank for example), the road tax can also be renewed online and Tune Money would deliver the road tax to the address specified.

A H&S plan would be launched in 3 to 4 months time.

Source: The Star & TAS Research

Transforming Agents to Wealth Planners

Prudential is in the process of transforming its agents to wealth planners. The wealth planners are similar to financial advisers in that they would assess a customer's financial position and risk profile before recommending a product.

There will be 3 categories of wealth planners: premier, executive and senior, according to the skills, competence and production level.

Prudential currently has life insurance, general insurance, unit trusts, takaful, will and trust services under its brand.

A point-of-sales technology would be launched in July to assist the wealth planners.

Source: The Star